Angela Carella: Mind the budget gap

Updated 12:49 pm, Friday, August 12, 2011

Connecticut has spent too much money, and it's time for you to pick up the tab.

The new income tax rates kicked in Aug. 1, so if you get paid weekly, you saw last week how much your check will shrink.

But most people are paid every two weeks, and they got their first look at their shrunken checks this week.

What hurts is that the state taxes personal income from January to December, but it's already August. So the state is collecting 12 months worth of the new income-tax increases in the five months remaining.

That means that, for the rest of 2011, your new tax increase will be more than twice what it was meant to be. The state will catch up Jan. 1, when the increase will revert to the intended amount.

How much more, then, will you pay in income taxes for the rest of the year?

It's not a problem for single taxpayers whose annual salary is less than $50,000 and couples who earn less than $100,000. The tax hike does not affect them, now or in January.

But in Stamford, where the cost of living is among the highest in the nation, many people earn more than that.

So let's start at an annual salary of $70,000 for singles, which is near the average in Stamford. According to information from the state Department of Revenue Services, they will pay about $7.50 more a week in taxes until the end of December. That's $30 more a month.

Again, it will be less than half that amount come January.

Singles earning $80,000 a year will pay nearly $12 a week more in taxes for the rest of this year, or $48 a month. Singles earning $90,000 a year will pay about $17 a week more, or $68 more a month. And singles earning $100,000 a year will pay about $20 more a week for now, which comes to about $80 more a month.

Married couples who earn $100,000 a year and file taxes jointly will pay about $21 more a week for the remainder of 2011. That's $84 more a month for the rest of the year.

Married couples earning $150,000 a year, filing jointly, will pay about $47 more per week in taxes -- that's $188 more a month.

Married couples earning $250,000 a year will pay another $110 per week, or $440 more in taxes for each month remaining in the year.

But Connecticut residents are paying higher taxes on more than just income. Among them -- the sales tax was raised from 6 percent to 6.35 percent, and it will be charged on many goods and services that once were exempt. The property-tax credit popular with middle-class homeowners has been reduced from $500 to $300.

Last week, Gov. Dannel P. Malloy, who was Stamford mayor for 14 years, said he doesn't expect an outcry when residents open their paychecks because they have known for months that the tax hike was coming, and they accept that it is needed to close a $3.6 billion state budget gap.

Hikes in taxes and fees, and other revenue growth, will fill about two-thirds of the gap, according to Malloy's plan. The remaining third will come from spending cuts, though most of that is state employee union concessions that have yet to be ratified.

Much of the tax pain will be felt by high-income earners, Malloy has said. For example, some of those who earn $1 million a year will pay an extra $700 a week, or $14,000 for the remaining months of 2011.

For most people, though, the hike is not significant, Malloy said last week.

But that is for you to decide.

If you are single and earning $80,000, which is a moderate income in high-rent Stamford, you will come up $48 short for each month remaining in 2011. What will you give up?

If you are a couple raising a family on $150,000 a year -- again, moderate for Stamford -- you will be out another $188 a month until January. Will a bill go unpaid?

Thanks to the state, you may have to fill a budget gap of your own.

Angela Carella can be reached at 203-964-2296 or angela.carella@scni.com.